M&G assets fall, targets £200m savings | Aviva rises
Savings and investments business M&G is targeting £200 million in cost savings through digitalisation, removing management layers and streamlining governance.
The company returned to net client inflows in its Wealth business with a total of £0.2 billion, which compares to net client outflows of £1.4bn in 2021.
But assets under management and administration fell £28bn to £342bn as a global market rout last year curbed investor appetite for riskier assets.
“We will focus the business on targeted opportunities where we believe our differentiated propositions and services give us a good starting point,” said new chief executive Andrea Rossi.
“By having this focus we expect to deliver increased adjusted operating profit from Asset Management and Wealth to more than 50% of the group total by the end of 2025. Our targets are ambitious but achievable.”
Adjusted operating profit before tax of £529 million (2021: £721m) was affected by the impact of rising yields on the annuity margin and a foreign exchange loss on the company’s dollar-denominated subordinated debt.
In M&G Wealth, adjusted operating profit more than doubled to £96 million, due to an increase in shareholder transfers from PruFund driven by strong investment returns for our clients.
The board declared a second interim dividend of 13.4p per share, in line with its policy of stable or increasing dividends, with a total dividend per share of 19.6p, up 7% year-on-year (2021: 18.3p per share).
Insurance and wealth business Aviva posted a better-than-expected 35% rise in annual operating profit, driven by a rise in life and general policy sales. and announced a £300m share buyback.
Profits for the year came in at £2.2bn against a company-compiled consensus of £1.75bn and a total dividend of 31p a share was declared, in line with expectations. Aviva upgraded dividend guidance to low-to-mid single digit growth
A recommended final dividend per share of 20.70p (2021: 14.70p) makes a total dividend per share of 31p (2021: 22.05p).
Amanda Blanc, group chief executive, said: “We are making excellent progress at Aviva. Operating profits and dividends are growing and we have strong trading momentum despite significant market volatility.
“We have radically simplified Aviva, we are financially strong and we are utterly focused on transforming and growing the business.
“Our core businesses in the UK, Ireland and Canada grew in 2022, and contributed to a very strong, all round performance. Life insurance value of new business is up 15%, general insurance sales are up 8% and overall operating profit is up 35%.
“We are investing to make it easier for customers to do business with Aviva and customer numbers in the UK have grown to 15.5m .”
North Sea oil producer Harbour Energy saw its profits evaporate as $1.5 billion of windfall taxes left it with a profit after tax of just $8m (£6.7m).
It came as revenues from gas nearly doubled to $2.3bn (£1.9bn) while crude oil income was up 27% to $2.8bn (£2.4bn).
The FTSE 100 closed 49.94 points lower at 7,879.98 as Federal Reserve chair Jerome Powell largely stuck to the hawkish tone of the previous day.
AJ Bell investment director Russ Mould said: “While Powell softened things a little by saying nothing is decided yet, the clear message is future rate decisions will be dependent on the data and for now that seems to be tilting things more towards a 50-basis point rather than 25 basis point rate rise later this month.
“This would shatter the market’s comfortable illusion at the start of the year that rates were about to pivot and a soft landing for the US economy could be engineered.
“A bright spot on the UK market was offered by insurer Aviva, where current CEO Amanda Blanc has done an enviable job.
“Streamlining operations and selling off underperforming businesses is a well-worn strategy, but one Blanc has executed well and that’s evident in the 2022 numbers which show a big increase in profit and dividends accompanied by a big share buyback.”